Government employees are compensated 16% more richly than their private sector counterparts

In a study released in January, the Congressional Budget Office (CBO) concluded that, on average, civilian federal employee compensation (including both wages and benefits spending) trumps that of the private sector. Except for individuals with a professional degree or doctorate, the imbalance held true at each education level, including (i) high school diploma or less, (ii) some college, (iii) bachelor’s degree, and (iv) master’s degree. The CBO summarized its findings as follows:

“Overall, the federal government paid 16 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.”

“Even among workers with similar observable characteristics, however, employees of the federal government and the private sector may differ in other attributes, such as motivation or effort, that are not easy to measure but that can matter a great deal for individuals’ compensation.”

Additionally, the study did not consider certain job benefits that are difficult to quantify. Among these is the job security that the federal government tend to offer its employees.

Eric Madsen

Mr. Madsen is a Chartered Financial Analyst (CFA) charterholder and a Manager at Fulcrum Inquiry, a finance and economics consulting firm that performs economic damages analysis involving commercial litigation, financial investigations, business valuations, and forensic accounting. He also holds an MBA from the UCLA Anderson School of Management and a B.S. in Economics. He conducts expert analysis in finance and economics. Mr. Madsen may be contacted at 213.787.4122 or at emadsen@fulcrum.com.

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